Career Advice, Salary Transparency

Are Companies Checking Your Credit Score When You Apply? To Be Honest, Yes

Your credit score says a lot about you and that’s why many employers will include a credit check along with a background check.

Granted, your credit scores are probably a far-fetched idea when you’re a candidate for a job you want, but you might want to reconsider the importance you place on them.

Two tech executives say that credit scores play an extremely important role in their hiring decisions and, often times, can predict future behavior. This crystal-ball aspect of your scores is what makes them such an integral part of your candidate profile.

Which Fields Use Credit Scores During Background Checks?

While there’s not a single answer to this question, you can be assured that IT companies who contract with financial institutions most likely will perform credit checks as part of their contractual agreements with their clients.

Trave Harmon, CEO of Massachusetts-based Triton Technologies, said his company started running credit checks in 2013 when Triton picked up banking clients.

“As their requirement within their contract, banks required credit checks and background checks for all employees of an outsourced IT provider,” Harmon said.

If you find yourself applying to one of these companies, they should make you aware that credit scores are included in your background check.

“Our candidates are clearly made aware of an extremely extensive background check due to the nature of our business,” Harmon said.

Ian McClarty, president of PhoenixNAP Global IT Services, said that only certain employees in his company get credit checks as part of their interview process.

“We do not run a credit check on all job applicants,” McClarty said. “There has to be a reason, such as the job is in finance or it’s an executive level job with profit and loss responsibility or a high-security clearance position.”

Credit Checks Can Expose a Circumstances That May Lead to Theft

Put yourself in the position of someone like Harmon or McClarty. You run a business whose clients include banks with millions or billions of dollars in their accounts.

You want to ensure that your employees keep their hands off that money. Now, you can take the obvious approach of not hiring criminals, but there’s another, more subtle reason behind credit checks: debt.

Credit reports show your monthly debt obligations and candidates with a lot of debt may be inclined to take money that isn’t theirs in order to make ends meet.

“I am interested in the applicant’s ability to pay their debt based on the salary for the position,” McClarty said. “If their monthly expenses surpass debt obligations, that is … a risk factor for committing financial exploitation.”

Low Credit Scores Can Increase the Chances of Dishonesty

Harmon has noticed a correlation between candidates’ low credit scores and an increased propensity for dishonesty.

“We’ve encountered this, surprisingly, on people who have poor credit and are attempting to get a job and therefore will lie on the resume in order to get an interview,” Harmon said. “Luckily, we’ve never hired a person like this, but we have encountered it during the interview process.”

While there’s no widespread data available on the connection between bad credit scores and truthfulness in the interview process, what Harmon said does match the general theory behind credit scores.

Lower scores are due to overspending, late payments, bankruptcies and civil judgments. These derogatory marks tell lenders that borrowers are less reliable and more of a risk.

Likewise, executives like Harmon see bad scores as a negative quality. He elaborated on one situation in which a candidate made it through the first stage of interviews.

When he went to the second stage of interviews with the CEO and his would-be supervisor, the interviewers quickly realized the candidate had lied his way through preliminary questions.

“His background check came back a day later and showed multiple larcenies for theft and extremely low credit scores,” Harmon noted. “This actually has happened multiple times. It’s very disappointing.”

Employers See Good Credit Scores as a Trustworthy Quality

Again, good and bad credit scores aren’t a guarantee that candidates will turn out to be flawless or hopelessly flawed.

However, just like bad credit scores, an exemplary credit history is an influential factor in how companies perceive a candidate.

Harmon talked about an employee who passed his or background check and credit check with excellence, prompting a hire and, two years later, the employee is putting together a solid career.

“Good credit scores tell me that the candidate is not in the job for the buck and would actually be a good person for the long-term,” Harmon said, “because they can handle their finances, put down roots and can work with sensitive industry clients.” 

 

J.R. Duren is a personal finance reporter at HighYa.com, where he covers credit cards, credit scores, student loans and more. He is a three-time winner at the Florida Press Club’s Excellence in Journalism contest.

 

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